Don't let it get away!

So far, Microsoft's (NASDAQ: MSFT) Surface hasn't been a game-changer by any means, although units did hold up nicely coming out of the holiday quarter. The software giant won't officially disclose unit volumes, but IDC estimates that the company shipped 900,000 units in each of the past two quarters.

DIGITIMESis out today with some supply chain rumblings, speculating that Microsoft is preparing to launch second-generation models at its Build Developer Conference that takes place in San Francisco from June 26 to June 28. The company could be trying to steal the spotlight from Apple (NASDAQ: AAPL) , whose own Worldwide Developers Conference will occur on June 10 to June 14 at the same venue.

Both companies like to use developer conferences to unveil new product offerings. Apple will undoubtedly show off its new software versions, and may also likely have some hardware announcements in the form of MacBook refreshes. On the tablet front, iPads probably won't be unveiled at WWDC. Surface was revealed at a separate event last June, but the RT model would launch several months later in October alongside Windows 8.

The Taiwanese publication says that suppliers have shipped components for between 1 million and 1.5 million Surface Pro models this year, which is the full-featured variant sporting an Intel processor. DIGITIMES estimates that so far Microsoft has sold a total of 1.5 million Surface units, which includes 1 million Surface RT and 500,000 Surface Pro models.

That's relatively close to the 1.8 million total from IDC's estimates, but well short of the 3 million to 4 million that Microsoft had been targeting. Late last year, The Wall Street Journal said the software giant was targeting 3 million to 5 million. Due to this lackluster performance relative to internal forecasts, Microsoft is reportedly proceeding with a "cautious attitude" for the second-generation models.

The company is keeping most of the same suppliers, and may be looking to reduce the size of the display to 7 inches to 9 inches, which would be down from the current 10.6-inch display found on both Surface RT and Surface Pro.

If Microsoft wants the second-generation Surface to fare better, it should move down the size spectrum and abandon its absurd 16:9 aspect ratio that makes its tablet awkward and unwieldy in portrait usage. Microsoft should also unify Surface around the Intel chips, particularly since this year's Haswell chips will remove any reason for Windows RT to still exist.

It's been a frustrating path for Microsoft investors, who've watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In a new premium report on Microsoft, a Motley Fool analyst explains that while the opportunity is huge, so are the challenges. The report includes regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.

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Evan, you're flat wrong in insulting the "absurd" aspect ratio of the Surface.

The natural 16:9 ratio for most modern films, cinematic video games, and even some websites is EXACTLY the correct ratio for a modern device. Further, one of the best features of the Surface (and other 16:9 Windows 8 devices, I might add) is the ability to "snap" apps with excellent use of screen real estate. This simply wouldn't work as well at 4:3.

I have an iPad 2 in addition to a Surface. I have always found the iPad to be poorly balanced and quite unpleasant to hold for extended periods in portrait mode. By contrast, I find the Surface -- which now gets daily use where the iPad might be used once a week -- quite comfortable in all positions.

If the new 7.5" Surface, reputed to sell for $400.00, runs Windows RT, it's obviously DOA, since total worldwide sales of ALL RT devices in 1Q2013 was only 200,000 from ALL vendors.

If the 7.5" Surface runs Windows 8, then it will be underpowered for that price, and most likely the true cost for a functioning unit will be $500.00 with necessary "upgrades". It's very unlikely there will be a compelling reason for very many people to want to buy such a device at this price point.

Even worse, massive advertising won't help Microsoft sell either of these things, because their previous ridiculous Surface ads and the subsequent failure of the Surfaces being advertised are still fresh in the minds of anyone who was paying attention. It's very difficult to build an ad campaign based on a previously failed product with the same name. I mean, would Ford have tried an ad campaign for the New Edsel, or Coke tried introducing New New Coke?

BTW, the most interesting part of this will be whether Microsoft DOES in fact offer an RT version, because if they DON'T, then that signals they've given up on RT.

Nonetheless, even after all of this, I predict that Microsoft's stock price will continue to perform well for at least another year, as it will take that long for the fool (not Fool) "investors" to realize that Microsoft is no longer capable of competing in technology growth sectors, and has become just another big company stuck in a slowly shrinking tech sector, namely enterprise and SMB PC software.

Yes how absurd. How could they expect anybody to want such a stupid ratio?!!? The only other products that come in such a ratio are all non apple tablets, non apple smart phones, tvs and monitors. The only people actually producing anything in 16:9 are game makers & TV studios. Movies still come in a lot of strange sizes but they are generally around 16:9.

So wait it is absurd to have an aspect ratio that matches the vast majority of media content on a device that will be used to consume media?

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Evan is a Senior Technology Specialist at The Motley Fool. He was previously a Senior Trading Specialist at a major discount broker. Evan graduated from the University of Texas at Austin, and is a CFA charterholder.
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